Mr. Miller of North
Carolina (for himself, Mr.
Chandler, Mr. Cohen,
Mr. Ellison, and
Mr. Sherman) introduced the following
bill; which was referred to the Committee
on Financial Services

A BILL

To provide for a safe, accountable, fair, and efficient
banking system, and for other purposes.

1.

Short title

This Act may be cited as the
Safe, Accountable, Fair, and Efficient
Banking Act of 2010 or the SAFE Banking Act of 2010.

2.

Definitions

(a)

In
general

As used in this Act,
the following definitions shall apply:

(1)

Appropriate
Federal regulator

The term appropriate Federal
regulator means—

(A)

the Board of
Governors of the Federal Reserve System (in this Act referred to as the
Board);

(B)

the Comptroller
General of the United States (in this Act referred to as the
Comptroller); or

(C)

the Federal
Deposit Insurance Corporation (in this Act referred to as the
Corporation).

(2)

Average total
consolidated assets

the term average total consolidated
assets has the same meaning as in part 225 of title 12, Code of Federal
Regulations, as in effect on the date of enactment of this Act, or any
successor thereto.

(3)

FDIC-assessed
deposits

The term FDIC-assessed deposits means the
assessment base, as computed under part 327 of title 12, Code of Federal
Regulations, as in effect on the date of enactment of this Act, or any
successor thereto.

(4)

Financial
company

The term financial company means any nonbank
financial company that is supervised by the Board.

(5)

Liabilities

The
term liabilities equals a financial company’s total assets less
tier 1 capital.

(6)

Nondeposit
liabilities

The term nondeposit liabilities means
the total assets of a bank holding company, less tier 1 capital, less
FDIC-assessed deposits.

(7)

Tier 1
capital

The term tier 1 capital has the same meaning
as in part 225 of title 12, Code of Federal Regulations, as in effect on the
date of enactment of this Act, or any successor thereto.

(b)

Nonbank
financial company definitions

For purposes of this Act the following
definitions shall apply:

(1)

Foreign nonbank
financial company

The term foreign nonbank financial
company means a company (other than a company that is, or is treated in
the United States, as a bank holding company or a subsidiary thereof) that
is—

(A)

incorporated or
organized in a country other than the United States; and

(B)

substantially
engaged in, including through a branch in the United States, activities in the
United States that are financial in nature (as defined in section 4(k) of the
Bank Holding Company Act of 1956).

(2)

U.S. nonbank
financial company

The term U.S. nonbank financial
company means a company (other than a bank holding company or a
subsidiary thereof) that is—

(A)

incorporated or
organized under the laws of the United States or any State; and

(B)

substantially
engaged in activities in the United States that are financial in nature (as
defined in section 4(k) of the Bank Holding Company Act of 1956).

(3)

Nonbank
financial company

The term nonbank financial company
means a U.S. nonbank financial company and a foreign nonbank financial
company.

3.

Deposit
concentration limit

Section
3(d) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(d)) is
amended—

(1)

in paragraph (2),
by striking subparagraph (A) and inserting the following:

(A)

Nationwide
concentration limits

No bank holding company may hold more than
10 percent of the total amount of deposits of insured depository institutions
in the United States.

;
and

(2)

by striking
paragraph (5) and inserting the following:

(5)

Enforced
compliance

The Board shall require any bank holding company
having a deposit concentration in violation of this subsection to sell or
otherwise transfer assets to unaffiliated firms to bring the company into
compliance with this
subsection.

.

4.

Leverage ratio
and size requirements for bank holding companies

The Bank Holding Company Act of 1956 (12
U.S.C. 1841 et seq.) is amended by inserting after section 5 the following new
section:

No bank holding company or financial company may maintain
tier 1 capital in an amount equal to less than 6 percent of average total
consolidated assets.

(2)

Balance sheet
leverage ratio

No bank holding company or financial company may
maintain less than 6 percent of tier 1 capital for all outstanding balance
sheet liabilities, as determined under section 13(m) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m(m)).

(3)

Exemptions

(A)

In
general

The Board may adjust the leverage ratio requirements
provided in paragraph (1) or (2), for any class of institutions, based upon the
size or activity of such class of institutions. No adjustment made under this
subparagraph may allow an institution to carry less capital than provided in
paragraph (1) or (2).

(B)

Adjustments

Consistent
with this subsection, the Board may adjust, by rule, the definitions of the
terms leverage ratio and balance sheet leverage ratio
to harmonize such ratios with official international agreements regarding
capital standards, only if the Board determines that the international capital
standards are commensurate with the credit, market, operational, or other risks
posed by the bank holding companies or financial companies to which the
international agreements regarding capital standards apply.

(C)

Authority of
other regulators

(i)

In
general

The appropriate Federal regulator may, in a manner
consistent with this subsection, grant any bank holding company an emergency
temporary exemption from the ratio requirements provided in paragraph (1) or
(2), where necessary to prevent an imminent threat to the financial stability
of the United States.

(ii)

Publication
required

Any exemption granted under this subparagraph shall be
published in the Federal Register within a reasonable period after the date on
which such exemption is granted, not to exceed 90 days, and such publication
shall provide—

(I)

the name of the
bank holding company or financial company being granted an exemption;

(II)

the reason for
the exemption; and

(III)

the plan of the
appropriate Federal regulator detailing the manner by which the bank holding
company shall be brought into compliance with paragraphs (1) and (2).

Notwithstanding any other provision of law applicable
to insured depository institutions, the Board shall, within 1 year of the date
of enactment of the SAFE Banking Act of
2010, promulgate regulations establishing a leverage ratio and a
balance sheet leverage ratio, in a manner consistent with paragraphs (1) and
(2), for all operating subsidiaries of bank holding companies and financial
companies.

(5)

Prompt
corrective action

(A)

Authorities

The
Board shall require any bank holding company or financial company that is in
violation of paragraph (1) or (2) to raise capital, sell or otherwise transfer
assets or off-balance sheet items to unaffiliated firms, or impose conditions
on the manner in which the bank holding company conducts 1 or more activities
to bring the company into compliance with paragraphs (1) and (2).

(B)

Corrective
action plan

The Board shall, not later than 60 days after
determining that a bank holding company or financial company is in violation of
paragraph (1) or (2), present to the members of the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a plan detailing the manner by which
the bank holding company or financial company shall be brought into compliance
with the applicable provision of law.

(C)

Reports to the
Congress

(i)

Written
reports

The Board shall provide to the members of the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives periodic reports for each
60-day period during which a corrective action plan required by subparagraph
(B) has not been fulfilled.

(ii)

Testimony

The
Board shall provide testimony to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the House of
Representatives for each 90-day period that a corrective action plan required
by subparagraph (B) has not been fulfilled.

No bank holding
company may possess nondeposit liabilities exceeding 2 percent of the annual
gross domestic product of the United States.

(B)

Determination of
gross domestic product

The annual gross domestic product of the
United States shall be determined for purposes of subparagraph (A) using the
average of such product over the 16 calendar quarters, as calculated by the
Bureau of Economic Analysis of the Department of Commerce, most recently
completed as of the time of the determination.

(C)

Off-balance-sheet
liabilities

The computation of the limit under this paragraph
shall take into account off-balance-sheet liabilities.

(D)

Treatment of
insurance companies

Notwithstanding the liability limit
established in this section, the Board may set a separate liability limit with
respect to certain bank holding companies primarily engaged in the business of
insurance, as the Board deems necessary in order to provide for consistent and
equitable treatment of such institutions. In establishing such separate
liability limits for insurance companies, for any insurance company with any
subsidiary regulated by a State insurance regulator, the Board shall consult
the appropriate State insurance regulator.

(E)

Treatment of
foreign deposits

Notwithstanding the definition of the term
nondeposit liabilities established in this section, the Board may
exclude from its calculation of nondeposit liabilities any foreign and other
deposits not covered by the definition of the term FDIC-assessed
deposits, if the Board deems such action necessary to ensure the
consistent and equitable treatment of institutions with international
operations.

(2)

Financial
companies

(A)

Limit on
nondeposit liabilities for financial companies

No financial
company may possess nondeposit liabilities exceeding 3 percent of the annual
gross domestic product of the United States.

(B)

Determination of
gross domestic product

The annual gross domestic product of the
United States shall be determined for purposes of subparagraph (A) using the
average of such product over the 16 calendar quarters, as calculated by the
Bureau of Economic Analysis of the Department of Commerce, most recently
completed as of the time of the determination.

(C)

Off-balance-sheet
liabilities

The computation of the limit under this paragraph
shall take into account off-balance-sheet liabilities.

(D)

Treatment of
insurance companies

Notwithstanding the liability limit
established by this paragraph, the Board may set a separate liability limit
with respect to insurance companies or other financial companies, as the Board
determines necessary in order to provide for consistent and equitable treatment
of such institutions. In establishing such separate liability limits for
insurance companies, for any insurance company with any subsidiary regulated by
a State insurance regulator, the Board shall consult with the appropriate State
insurance regulator.

(E)

Treatment of
foreign deposits

Notwithstanding the definition of the term
nondeposit liabilities established in this section, the Board may
exclude from its calculation of nondeposit liabilities any foreign and other
deposits not covered by the definition of the term FDIC-assessed
deposits, if the Board deems such action necessary to ensure the
consistent and equitable treatment of institutions with international
operations.

(3)

Prompt
corrective action

(A)

Authorities

The
Board shall require any bank holding company or financial company that is in
violation of a provision of paragraph (1) or (2), as applicable, to sell or
otherwise transfer assets or off-balance-sheet items to unaffiliated firms, to
terminate 1 or more activities, or to impose conditions on the manner in which
the bank holding company or financial company conducts 1 or more activities to
bring the company into compliance with paragraphs (1) or (2), as
applicable.

(B)

Corrective
action plan

The Board shall, not later than 60 days after
determining that a bank holding company or financial company is in violation of
paragraph (1) or (2), present to the members of the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a plan detailing the manner by which
the bank holding company or financial company shall be brought into compliance
with the applicable provision.

(C)

Reports to the
Congress

(i)

Written
reports

The Board shall provide to the members of the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives periodic reports for each
60-day period during which a corrective action plan required by subparagraph
(B) has not been fulfilled.

(ii)

Testimony

The
Board shall provide testimony to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the House of
Representatives for each 120-day period during which a corrective action plan
required by subparagraph (B) has not been fulfilled.

(c)

Definitions

As
used in this section, the following definitions shall apply:

(1)

Appropriate
Federal regulator

The term appropriate Federal
regulator means—

(A)

the Board of
Governors of the Federal Reserve System (in this Act referred to as the
Board);

(B)

the Comptroller
General of the United States (in this Act referred to as the
Comptroller); or

(C)

the Federal
Deposit Insurance Corporation (in this Act referred to as the
Corporation).

(2)

Average total
consolidated assets

The term average total consolidated
assets has the same meaning as in part 225 of title 12, Code of Federal
Regulations, as in effect on the date of enactment of this Act, or any
successor thereto.

(3)

FDIC-assessed
deposits

The term FDIC-assessed deposits means the
assessment base, as computed under part 327 of title 12, Code of Federal
Regulations, as in effect on the date of enactment of this Act, or any
successor thereto.

(4)

Financial
company

The term financial company means any nonbank
financial company that is supervised by the Board.

(5)

Liabilities

The
term liabilities equals a financial company’s total assets less
tier 1 capital.

(6)

Nondeposit
liabilities

The term nondeposit liabilities means
the total assets of a bank holding company, less tier 1 capital, less
FDIC-assessed deposits.

(7)

Foreign nonbank
financial company

The term foreign nonbank financial
company means a company (other than a company that is, or is treated in
the United States, as a bank holding company or a subsidiary thereof) that
is—

(A)

incorporated or
organized in a country other than the United States; and

(B)

substantially
engaged in, including through a branch in the United States, activities in the
United States that are financial in nature (as defined in section 4(k) of the
Bank Holding Company Act of 1956).

(8)

U.S. nonbank
financial company

The term U.S. nonbank financial
company means a company (other than a bank holding company or a
subsidiary thereof) that is—

(A)

incorporated or
organized under the laws of the United States or any State; and

(B)

substantially
engaged in activities in the United States that are financial in nature (as
defined in section 4(k) of the Bank Holding Company Act of 1956).

(9)

Nonbank
financial company

The term nonbank financial company
means a U.S. nonbank financial company and a foreign nonbank financial
company.

(10)

Tier 1
capital

The term tier 1 capital has the same meaning
as in part 225 of title 12, Code of Federal Regulations, as in effect on the
date of enactment of this section, or any successor
thereto.

.

5.

Capital
Assessment Program

The Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended by inserting
after section 7 the following new section:

7A.

Capital
Assessment Program

(a)

Annual
assessments

Beginning 1 year after the date of enactment of the
SAFE Banking Act of 2010, and
annually thereafter, the Board shall conduct a capital assessment to estimate
losses, revenues, and reserve needs for bank holding companies and financial
companies.

(b)

Reports

The
Board shall provide a report on the results of the capital assessment program
under this section to the Secretary, the members of the Committee on Banking,
Housing, and Urban Affairs of the Senate, and the members of the Committee on
Financial Services of the House of
Representatives.

.

6.

Amendment to the
Securities and Exchange Act

Section 13 of the Securities Exchange Act of
1934 (15 U.S.C. 78m) is amended by adding at the end the following new
subsection:

(m)

Standard balance
sheet calculation for reports

(1)

Establishment of
standard balance sheet reporting

Not later than 1 year after the
date of enactment of the SAFE Banking Act of
2010, the Commission, or a standard setter designated by and
under the oversight of the Commission, shall issue a rule requiring that each
issuer of securities required to file reports under this section record all of
its assets and liabilities on its balance sheets. The recorded amount of assets
and liabilities shall reflect a reasonable assessment by the issuer of the most
likely outcomes, given currently available information. Such issuers shall
record all financings of assets for which the issuer has more than minimal
economic risks or rewards.

(2)

Exclusion for
indeterminate liabilities

If an issuer required to file reports
under this section cannot determine the amount of a particular liability, for
purposes of paragraph (1), such issuer may exclude that liability from its
balance sheet only if it discloses an explanation of—

(A)

the nature of the
liability and purpose for incurring it;

(B)

the most likely
and maximum loss that the issuer could incur from the liability;

(C)

whether there is
any recourse to the issuer by another party and, if so, under what conditions
such recourse could occur; and

(D)

whether the issuer
has any continuing involvement with an asset financed by the liability or any
beneficial interest therein.

(3)

Rulemaking

The
Commission shall promulgate rules to ensure compliance with this subsection,
including enforcement by the Commission and civil liability under the
Securities Act of 1933 and this
title.

.

7.

Effective
date

(a)

In
general

This Act and the amendments made by this Act shall take
effect upon the date of enactment of this Act.

(b)

Allowance for
bank holding companies and financial companies not in compliance at date of
enactment

Any institution that is in violation of—

(1)

the deposit
concentration limit in section 3(d)(2)(A) of the Bank Holding Act of 1956, as
amended by this Act, as of the date of enactment of this Act, shall bring
itself into compliance with that limit not later than 1 year after the date of
enactment of this Act;

(2)

the leverage
ratios in section 5A of the Bank Holding Act of 1956, as amended by this Act,
as of the date of enactment of this Act, shall bring itself into compliance
with those ratios, not later than 1 year after the date of enactment of this
Act; and

(3)

the limits on
nondeposit liabilities in section 7A of the Bank Holding Company Act of 1956,
as added by this Act, as of the date of enactment of this Act, shall bring
itself into compliance with those limits, not later than 3 years after the date
of enactment of this Act.

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